APPICATION OF INFORMATION COMMUNICATION TECHNOLOGY TOOLS

TOOLS IN MANAGEMENT OF INVENTORY IN RETAIL SUERMARKETS IN

NYERI, KENYA.

By

JOAB SHIKUKU

ANN WACHIRA

MARTIN MSEBE

A RESEARCH PROJECT SUBMITTED TO THE DEPARTMENT OF OPERATION

SUPPLY CHAIN MANAGEMENT IN THE SCHOOL OF BUSINESS
MANAGEMENT AND ECONOMICS IN PARTIAL FULFILLMENT FOR THE
AWARD OF BACHELOR OF PURCHASING AND SUPPLIES CHAIN
MANAGEMENT OF DEDAN KIMATHI UNIVERSITY OF TECHNOLOGY.

AUGUST, 2025

i
 Declaration

This research project represents our own original work, conducted in fulfillment of the
requirements for the degree, Bachelors of purchasing and supplies management. No part of
this work has been previously submitted for a degree or other qualification at this or any other
institution. We have acknowledged and properly referenced all sources used in this research,
ensuring academic integrity.

1. JOAB SHIKUKU

Signature................................... Date.....................................

2. ANN WACHIRA

Signature................................... Date.....................................

3. MARTIN MSEBE

Signature................................... Date....................................

Declaration by the supervisor

This research project has been submitted for examination with my approval as the university
supervisor.

DR. DAVID KIARIE

Signature................................... Date.....................................

(Supervisor)

ii
 Dedication

This research project is dedicated to ourselves for the unwavering dedication, perseverance,
and hard work invested in the pursuit of this degree. Our commitment to excellence and
continuous self-improvement has been the driving force behind this accomplishment.

Acknowledgment

This research project is dedicated to the Almighty God who has protected us from the very
beginning of this research. Besides, we specially dedicate it to our parents and pals for their
unabated support and compassion during our research work. We dedicate this proposal to our
supervisor for Dr. Kiarie his relentless support and impacting knowledge in us for the
betterment of our work.

Abstract

ICT in inventory management acts as a tool for enhancing efficiency and cost reduction.
Some supermarkets that have implemented ICT in inventory management have succeeded.

The study investigates the role of Information and Communication Technology (ICT)
towards the optimization of inventory management for retail supermarkets in Nyeri. The
study aims to assess the extent of ICT adoption and its impact on supermarkets' operational
effectiveness. Utilizing a descriptive research design, data were collected from various
supermarkets to determine the type of ICT systems employed.

The study recommends that supermarkets invest in appropriate ICT solutions to be able to
mechanize supply chain operations, minimize costs, and enhance customer satisfaction.
These findings help explain how technology drives efficiency in supermarket inventory
systems and offer supermarket managers advice on how to use ICT for competitive gain.

iii
Table of Contents

Declaration by the Students.......................................................................................................ii

Declaration by the supervisor....................................................................................................ii

Dedication.................................................................................................................................iii

Acknowledgment......................................................................................................................iii

Abbreviations............................................................................................................................iii

CHAPTER ONE........................................................................................................................7

1.1 Introduction.................................................................................................................7

Background of the study.....................................................................................................7

Inventory management.......................................................................................................8

Information Communication Technology..........................................................................9

Warehouse management system.......................................................................................12

Distribution Requirement Planning..................................................................................12

1.2 Enterprise Resource Planning...................................................................................13

1.3 Statement of problem................................................................................................13

1.4 Objectives of the Study.............................................................................................15

General Objectives............................................................................................................15

1.5 Research Questions...................................................................................................15

1.6 Significance of the Study...........................................................................................16

1.7 Limitations of the study.............................................................................................16

1.8.........................................................................................................................................16

1.9 Scope of the study.....................................................................................................16

CHAPTER TWO.....................................................................................................................17

1.10 Introduction...............................................................................................................17

1.11 Theoretical framework..............................................................................................17

The ...................................................................................................................................17

iv
 The ...................................................................................................................................18

1.12 Vendor managed inventory system...........................................................................23

Enterprise Resource Planning...........................................................................................25

Warehouse management System......................................................................................28

Distribution Resource Planning........................................................................................29

1.13 Conceptual Framework.............................................................................................29

CHAPTER THREE..................................................................................................................30

4.1 Introduction...............................................................................................................30

4.2 Target Population......................................................................................................31

List of Tables

List of Figures

v
Abbreviations

ICT Information Communication Technology

ERP Enterprise resource Planning

DRP Distribution Requirement Planning

WMS Warehouse management System

VMIS Vendor managed inventory system

OPERATIONAL DEFINTION OF TERMS

Inventory management

Reynolds (2005) defines inventory, as raw materials, components, consumables, work in

progress and / or finished goods that are stored for use as need arises.

Snyder (2003) defines inventory management as the process of forecasting, determining

requirements, setting targets and planning for the whole supply chain.

Reynolds (2005) defines it as a blend of policies and procedures businesses use in ensuring
that they have the right quantities in stock of goods and materials and are always availed for
sale.

McCormack (2005) refers to it as one of the most critical vital signs in management of
businesses today, as if it is not managed well managed, the entire sales system could fail.

Information Communication Technology

Ashis, and Sarangi, (2004), define Information and communication technology as piece(s) of
electronic equipment, which are fast, accurate and versatile and able to transmit messages by
means of electric transfer. These systems touch almost every sphere of activity. It makes
possible what a man could not do earlier in the conventional way. Richard, (2000) defines
this system as an electronic computational device having internal storage, a stored program of
instructions, and the capability of modifications of the set of instructions during execution of
program.

vi
 CHAPTER ONE
Introduction

In this chapter we looked at the background of the study on the application of ICT tools types in
retail supermarkets in Nyeri County, the objectives of the study, the research questions,
significance of the study, limitations of the study and, the scope of the study.

1.2 Background of the study

In the global business environment, inventory management has undergone significant
transformation due to the advancement of Information and Communication Technology (ICT).
From 2015 onwards, organizations worldwide have increasingly adopted ICT tools such as
Enterprise Resource Planning (ERP), Warehouse Management Systems (WMS), Vendor
Managed Inventory (VMI), and Distribution Requirements Planning (DRP) to streamline supply
chains, improve data visibility, and enhance inventory control (Wei et al., 2017; Li et al., 2019;
Pirmanta et al., 2021). These tools support real-time stock monitoring, demand forecasting, and
automated replenishment, reducing operational costs and improving customer service levels
(Sebayang et al., 2021).Companies such as Amazon and Alibaba have leveraged these
technologies to optimize supply chain responsiveness, demonstrating the global relevance of ICT
integration in inventory processes.
Across Africa, the adoption of ICT in inventory management has gained traction, especially in
response to inefficiencies and fragmented supply chain networks. According to McCrea (2019),
over 56% of African businesses have invested in WMS and other inventory control software to
improve warehouse operations. However, challenges remain, including high ICT implementation
costs, limited digital infrastructure, and a shortage of technical expertise (Ali et al., 2020).
Despite this, studies have shown that ICT-enabled inventory systems increase data accuracy,
reduce wastage, and enhance service delivery (Istiqomah et al., 2020). The rapid spread of
mobile technology and cloud-based applications in African countries has also made inventory
tools more accessible to small and medium enterprises (SMEs) (Zengwa & Choga, 2016).

In Kenya, the retail supermarkets is a dynamic and fast-growing industry that heavily relies on
effective inventory management to meet diverse consumer demands. Since 2015, ICT adoption

7
in Kenyan supermarkets has significantly improved inventory accuracy, reduced stockouts, and
enhanced decision-making (Irungu & Wanjau, 2017). Retailers are increasingly implementing
ERP systems, POS technologies, and mobile inventory apps to automate inventory tracking and
forecasting (Mongare & Nasidai, 2016). Government initiatives promoting digital transformation
and the rise of tech-savvy entrepreneurs have further accelerated ICT uptake in inventory
practices (Kenya ICT Authority, 2021). However, disparities in technology use persist between
urban and rural supermarkets, often due to financial and infrastructural constraints.
Specifically, in Nyeri County, supermarkets like Chieni have become central to the local
economy through job creation, support for local producers, and improved access to consumer
goods. Nonetheless, poor inventory practices continue to threaten profitability and operational
efficiency. ICT tools present a practical solution for overcoming these issues, enabling
supermarkets to align stock levels with consumer demand, reduce losses from overstocking or
stockouts, and improve customer satisfaction (Chitiga & Choga, 2016). As supermarkets in
Nyeri seek sustainable growth, investing in robust ICT-driven inventory systems becomes
increasingly critical for maintaining competitiveness in a digital age
.

1.3Problem Statement

Inventory being the largest fixed assets in supermarkets, inventory costs are biggest costs
associated with Supermarkets face the impossible task of physically monitoring the inventory
levels of each stock item. Supermarkets Struggle with the challenge of calibrating a sustainable
balance between holding inventory, inventory holding costs and demand. Ideally, these firms
could want to have standby inventory to immediately execute supply as demand arises. However,
this perspective equally raises the question of how economical it will be to undergo holding costs
at the expense of unrealized demand. Excessive inventory takes up physical space, drives up
storage costs and increases, too little inventory also results to poor customer service as
customer’s needs cannot be met on time striking an effective balance between inventory and
demand enhances business efficiency, promoting operational performance and competitiveness.
Using ICT solutions to automate Supermarket inventory processes optimizes efficiencies
(accuracy and flexibility) and achieves greater coordination of the activities of inventory
management of the organization in supermarkets

8
In Nyeri supermarket play a vital and significant role in contributing to economic development,
creation of employment and subsequently alleviation of poverty. Despite the huge contribution
these businesses make to the economy. Unfortunately, some of the major reasons for this shut
down trend include inventory management related problems. Among these have taken a step
towards inventory management practices to eliminate this threat and sustainably boost
performance.

However, the impact of ICT on inventory management on supermarket in Nyeri has not been
given appropriate attention. Irungu and Wanjau (2011) carried out a research on the effects of
Vendor managed inventory system (VMI) technology on supermarkets in Kenya. They found out
that utilization of VMI systems increased effectiveness in stock management and cash flow
management.

1.4Objectives of the Study

9
 1.4.1 General Objectives
The general objective of this research is role of ICT on management of inventory in retail
supermarkets in Nyeri County.

1.4.2 Specific Objectives

The specific objectives of the study are;

1. To determine the role of Enterprise Resource Planning in management of inventory

in Retail supermarkets in Nyeri, Kenya.
2. To analyze the role Distribution Requirement planning in management of inventory
in Retail supermarkets in Nyeri, Kenya.
3. To evaluate the role Vendor managed inventory system in management of inventory
in Retail supermarkets in Nyeri, Kenya.
4. To assess the role of Warehouse Management System in management of inventory in
Retail supermarkets in Nyeri, Kenya.

1.5 Research Questions

1. What is the role of Enterprise Resource Planning in management of inventory in retail

supermarkets in Nyeri?
2. How does Distribution Requirement Planning manage inventory in retail supermarkets in
Nyeri?
3. What is the role Vendor managed inventory system in management of inventory in retail
supermarket in Nyeri?
4. What is the role of Warehouse Management System in management of inventory in retail
supermarket in Nyeri?

1.6 Significance of the Study

10
The significance of this study lies in its potential to enhance the efficiency and effectiveness of
inventory management in retail supermarkets through the application of Information and
Communication Technology (ICT) tools.

By focusing on supermarkets in Nyeri County, particularly Chieni Supermarket, the study

provides valuable insights into how ICT can streamline inventory operations, reduce costs, and
improve overall organizational performance. It offers practical guidance for supermarket
managers and owners on how to leverage ICT solutions to address challenges such as stock outs,
overstocking, and poor demand forecasting.
Moreover, the study contributes to the ongoing discourse on digital transformation in Kenya’s
retail sector, encouraging retail supermarkets to adopt modern inventory practices.
Academically, the research adds to the growing body of knowledge on the role of technology in
supply chain management and serves as a reference point for future studies.
It also holds value for policymakers and educators by highlighting the need to support ICT
integration as a means to boost efficiency and competitiveness in the retail industry. Ultimately,
improved inventory management through ICT adoption can lead to better service delivery,
increased customer satisfaction, and contribute to local economic development and employment
creation.

1.7 Limitations of the study

Despite the relevance and importance of this study, it faced several limitations. Firstly, the
research was geographically limited to Nyeri County, focusing on a single supermarket (Chieni
Supermarket), which may not fully represent the diversity of retail operations across other
regions in Kenya. This affects the generalizability of the findings.
Secondly, the study relied heavily on self-reported data from employees and management, which
may be subject to bias or inaccuracies due to respondents' unwillingness to disclose internal
weaknesses or lack of ICT knowledge. Additionally, time and financial constraints limited the
scope of data collection and analysis, preventing a broader examination of other ICT systems and
their comparative effectiveness. Lastly, the rapid pace of technological change means that some
ICT tools examined during the research may become obsolete or upgraded, potentially affecting
the long-term relevance of the findings.

11
 1.8 Scope of the study

This study focuses on examining the application of Information and Communication Technology
(ICT) tools in inventory management within retail supermarkets in Nyeri County, with Chieni
Supermarket serving as the primary case study. The research is limited to evaluating how ICT
tools are utilized to improve inventory control, minimize operational costs, enhance stock
accuracy, and increase customer satisfaction. It covers various ICT tools such as VMI, WMS,
DRP and ERP.
The study specifically targets employees involved in inventory and supply chain functions,
including store managers, procurement officers, and IT personnel. It does not extend to financial
performance metrics or broader supply chain elements such as transportation or vendor
management. The research is confined to the period leading up to and including August 2025,
and all findings are based on the practices and conditions observed within that timeframe.

CHAPTER TWO

12
 LITERATURE REVIEW

2.1 Introduction
This chapter provides a detailed review of previous studies on the role of information
commutation technology on management of inventory in retail supermarkets in Nyeri

2.2 Review of Theoretical Literature

For a theoretical literature review on the role of information communication tools (ICT) in the
management of inventory in supermarkets in Nyeri County, several theories can be applied.
These include, The Transaction Cost Economics

2.2.1 Economic Order Quantity

Economic order quantity (EOQ) is the level of inventory that minimizes total inventory holding
costs and ordering costs. It is one of the oldest classical production scheduling models developed
by Harris F. W. in 1913, but Wilson, R. H. a consultant who applied it extensively, is given
credit for his in-depth analysis (William, 2007). EOQ only applies when demand for a product is
constant over the year and that each new order is delivered in full when the inventory reaches
zero. There is a fixed cost charged for each order placed, regardless of the number of units
ordered. There is also a holding or storage cost for each unit held in storage sometimes expressed
as a percentage of the purchase cost of the item (William, 2007). EOQ is used to determine the
optimal number of units of the product to order so that to minimize the total cost associated with
the purchase, delivery and storage of the product The required parameters to the solution are the
total demand for the year, the purchase cost for each item, the fixed cost to place the order and
the storage cost for each item per year. Note that the number of times an order is placed will also
affect the total cost; however, this number can be determined from the other parameters
(Heikkila, 2002).

According to Periasamy (2009), the EOQ model assumes that, the ordering cost is constant, the
rate of demand is constant, the lead time is fixed, the purchase price of the item is constant i.e. no
discount is available, the replenishment is made instantaneously, the whole batch is delivered at
once. The overall aim of the EOQ model is thus to determine the optimal number of units to
order in order to minimize costs associated with the procurement process of purchase, delivery,
and storage. However, EOQ essentially a trade-off between the ordering cost and inventory

13
holding cost is based on unrealistic assumptions which are no longer plausible and in the face of
modern inventory management technologies, the "optimization" outcome bears little or no
sense..

The formula is predicated on the assumption that demand, ordering, and holding costs are all
constant. The economic order quantity formula's purpose is to determine the ideal number of
product units to order in order to maximize profit. If this is accomplished, a company's costs for
purchasing, distributing, and storing units will be reduced.

Because the economic order quantity formula can be adjusted to predict different production
levels or order intervals, large firms with long supply chains and high variable costs can
determine economic order quantity using an algorithm embedded in their computer software.
Economic order quantity is a critical cash flow management technique. The formula can assist a
corporation in maintaining control over the amount of cash that is held in the inventory balance.
Many firms consider inventory to be their most valuable asset, second only to their human
resources, and these organizations must maintain sufficient inventory to meet the demands of
their consumers. If reducing the number of orders placed can help to reduce the amount of
inventory on hand, the cash savings can be put to use for another business purpose or investment.
The economic order quantity formula is used to determine when a company's inventory needs to
be replenished. When inventory reaches a predetermined level, the economic order quantity
formula, when applied to business operations, triggers the need to place an order for additional
units to replenish the stock. By identifying a reorder point, a business can prevent running out of
inventory and can continue to fulfil customer requests without interruption. If a company runs
out of inventory, there is a shortfall cost, which is the revenue that is lost as a result of the
company's inability to fill an order due to a lack of available inventory. Customers that are
unhappy with the company's inventory shortfall may stop doing business with them, or they may
order fewer items in the future.

14
2.2.2 Innovation diffusion theory

Rogers (1995) is the one who came up with the Innovation Diffusion Theory (IDT). IDT is
comprised of five major innovation characteristics, which are compatibility, complexity,
trialability, and observability. These qualities are relative advantage, compatibility, and
complexity. The process of user adoption and decision-making can be better understood by
considering these qualities. They can also be used to forecast the introduction of future technical
advancements and to shed light on the ways in which the variables discussed here interact with
one another.

Diffusion of an innovation refers to the process by which members of a social system are brought
up to speed on a new development by having it communicated to them in a specific way and over
a period of time through specific channels. The theory provides an explanation for the procedure
of the innovation decision process as well as the factors that determine the rate of adoption and
the different types of adopters. The objective of the theory is to make forecasts on the
probabilities of various types of adopters taking up a particular innovation as well as the rates at
which they do so. The process by which some people are more likely to accept a new idea,
behavior, or product also known as innovation does not occur instantaneously in a social system;
rather, it is a process by which some people are more likely to adopt the innovation than others.
The traits of people who accept a new technology quickly have been found to be distinct from
those of those who adopt a new technology more slowly, according to research. When trying to
convince a certain group of people to accept a new invention, it is critical to have a solid
understanding of the features of the target audience and how those traits will either facilitate or
impede adoption of the innovation.

Technology Acceptance Model

(TAM) TAM was developed to examine how individuals utilize technology at work in relation to
perceived utility and ease of usage (Katke, 2021). The TAM states that the most crucial factors in
deciding whether technology is accepted are its utility and perceived ease of use. It claims that
although humans are the two main variables, external factors like components and user
characteristics have an impact on them (Ajibade, 2018). Since individuals' readiness or

15
unwillingness to utilize technology systems is affected by their attitude, attitudes about utilizing
these systems should be taken into account as part of a strategy for deciding if the technology
will be accepted. TAM has been criticism for not taking into account outside factors like as
economic constraints, the influence of competition, suppliers, and other factors when examining
decision-making components. Because it covers all aspects of inventory management including
data recording, receiving goods and the researcher felt that technology systems would be a good
fit for this study. One of the extensions that Fishbein and Ajzen TRA have created is called
TAM. Davis first presented the TAM in 1986 (Davis, 1989), with the intention of explaining and
predicting the adoption, acceptance, or rejection of new technologies by users.

The theoretical foundation of TAM is established on the premise that when users are confronted
with a new technology, three primary elements impact their decision regarding how and when
they will utilise it. A user's conviction that they should use a system is indirectly influenced by
factors that are external to the system. These factors include perceived ease of use and perceived
usefulness (Erasmus et al., 2015). The way in which one feels about utilising in TAM involves
making a value judgement about whether the behaviour in question is positive or negative
(Erasmus et al., 2015). There is a direct effect on a person's intention to use a system while
utilising TAM. The perceived usefulness and simplicity of use both play a role in determining
how one feels about using something (Guritno & Siringoringo, 2013). An attitude toward
utilising and a sense of its utility are two factors that can impact a person's behavioural intention
to use.

2.3 Review of Critical Literature

ICT and Inventory Management Systems in Supermarkets

According to the Zengwa and Choga (2016) eximined the role of information and
communication technology (ICT) in company’ inventory management. Questionnaires,
interviews and observations were used as research methods.

The study exposed that the organizations' appropriation of ICT stock administration enhanced
the stock capacity through constant preparing of exchanges, availability of data from a brought
together database, profitability and productivity over every one of the offices. The device

16
enabled tests and balances on all stock transactions. It additionally revealed that ICT helped in
advancing standardized stock management actions, diminishing on work-load as nicely as on
enhancing the nice for the inventory function. The investigation additionally demonstrated that
however ICT has added to the powerful administration of inventories there were still ranges to be
enhanced as they contrarily influenced the proficiency of the whole system.

According to the Mongare and Nasidai (2014) investigated the impact of information and
communication technology on inventory control system in transport organization. Questionnaires
were used as the main data collection Descriptive statistics analysis method was to analyze the
gathered data. Stock manage is critical for every one of the partners. It has specific meanings to
the quite a number stakeholders. Stock control has diverse results relying upon the planning, that
is, whether the quick time period or long term affects are the ones in question. Inventory control
system solutions do no longer continually require extra technology, dedicated personnel or
staffing resources. Rather, current science infrastructure, together with equipment and computer
systems with network connectivity can be used. Inventory manipulates and associated
technologies guarantee real enhancements in the administration of acquirement, supplies
administration chain. The association should be targeted in terms of their wants and using the
proper technological know-how to reap goals, rather, than obtaining technology of stock manage
due to the fact other organizations have it. Government interest in guaranteeing centered media
transmission industry must be noticeable to decrease or expel avoidable expenses of actualizing
stock control. According to the Chitiga and Choga (2016) studied the role of information
communication technology (ICT) in inventory management of small to medium enterprises
(SMES.The SMEs are conscious significance of computers in stock administration yet however
needs appropriate mastery and experience of executing sound stock guidelines and structures
because of loss of financial sources and the consequences of ICT.

According to the Shah and Shin (2007) examined relationships among information technology,
inventory, and profitability. The study empirically shows that stock degrees have modified no
consistently in the three areas (production, wholesale and retail sectors). Additionally, the
outcomes verify the absence of an instantaneous hyperlink between IT funding and financial
overall performance in all three sectors. But the outcomes show that stock execution assumes a
huge intervening part in the assembling and retail segments, subsequently loaning help to the

17
procedure model of IT venture at the area level of total. Together, these outcomes feature the
distinctions among the producing, retail and wholesale sectors and have more extensive
ramifications for sweeping statement than comes about got from single division ponders. These
outcomes demonstrate that a tremendous influence (i.e. blessings) of IT funding on financial
overall performance is found out not directly, and is interceded through a change in inventory
overall performance. Investigating relationships which are set up at the firm stage at a better
degree of aggregation assists to recognize consistent limits of connections and increase idea
development

Efficient inventory management is based on an inventory management information system

which is a database for storing and administering all types of data required for efficient and
accurate inventory management. This may include modules or fields for keeping track of all
items and locations, requisitions, back orders, required levels of inventory on hand, reorder
points, lead times, inventory error tracking, and more. This type of system may interface with an
Enterprise Resource Planning (ERP) and other applications. An ERP management information
system integrates areas such as planning, purchasing, inventory, sales, marketing, finance,
human resources, etc. (www.investopedia.com). ERP has been used extensively in inventory
management with a varied of techniques applied innovatively ranging from Vendor managed
inventory system, Vendor managed inventory system and Distribution Resources planning. An
equally important system is a warehouse management system (WMS) which does not contain
customer data or prices as ERP rather; a functioning inventory management system needs the
continuous exchange between WMS and ERP.

According to the Zengwa and Choga (2016) eximined the role of information and
communication technology (ICT) in company’ inventory management. Questionnaires,
interviews and observations were used as research methods. The study exposed that the
organizations' appropriation of ICT stock administration enhanced the stock capacity through
constant preparing of exchanges, availability of data from a brought together database,
profitability and productivity over every one of the offices. The device enabled tests and
balances on all stock transactions. It additionally revealed that ICT helped in advancing
standardized stock management actions, diminishing on work-load as nicely as on enhancing the
nice for the inventory function. The investigation additionally demonstrated that however ICT

18
has added to the powerful administration of inventories there were still ranges to be enhanced as
they contrarily influenced the proficiency of the whole system.

According to the Mongare and Nasidai (2014) investigated the impact of information and
communication technology on inventory control system in transport organization. Questionnaires
were used as the main data collection Descriptive statistics analysis method was to analyze the
gathered data. Stock manage is critical for every one of the partners. It has specific meanings to
the quite a number stakeholders. Stock control has diverse results relying upon the planning, that
is, whether the quick time period or long term affects are the ones in question. Inventory control
system solutions do no longer continually require extra technology, dedicated personnel or
staffing resources. Rather, current science infrastructure, together with equipment and computer
systems with network connectivity can be used. Inventory manipulates and associated
technologies guarantee real enhancements in the administration of acquirement, supplies
administration chain. The association should be targeted in terms of their wants and using the
proper technological know-how to reap goals, rather, than obtaining technology of stock manage
due to the fact other organizations have it. Government interest in guaranteeing centered media
transmission industry must be noticeable to decrease or expel avoidable expenses of actualizing
stock control. According to the Chitiga and Choga (2016) studied the role of information
communication technology (ICT) in inventory management of small to medium enterprises
(SMEs).The SMEs are conscious significance of computers in stock administration yet however
needs appropriate mastery and experience of executing sound stock guidelines and structures
because of loss of financial sources and the consequences of ICT.

According to the Shah and Shin (2007) examined relationships among information technology,
inventory, and profitability. The study empirically shows that stock degrees have modified no
consistently in the three areas (production, wholesale and retail sectors). Additionally, the
outcomes verify the absence of an instantaneous hyperlink between IT funding and financial
overall performance in all three sectors. But the outcomes show that stock execution assumes a
huge intervening part in the assembling and retail segments, subsequently loaning help to the
procedure model of IT venture at the area level of total. Together, these outcomes feature the
distinctions among the producing, retail and wholesale sectors and have more extensive
ramifications for sweeping statement than comes about got from single division ponders. These

19
outcomes demonstrate that a tremendous influence (i.e. blessings) of IT funding on financial
overall performance is found out not directly, and is interceded through a change in inventory
overall performance. Investigating relationships which are set up at the firm stage at a better
degree of aggregation assists to recognize consistent limits of connections and increase idea
development

Efficient inventory management is based on an inventory management information system

which is a database for storing and administering all types of data required for efficient and
accurate inventory management. This may include modules or fields for keeping track of all
items and locations, requisitions, back orders, required levels of inventory on hand, reorder
points, lead times, inventory error tracking, and more. This type of system may interface with an
Enterprise Resource Planning (ERP) and other applications. An ERP management information
system integrates areas such as planning, purchasing, inventory, sales, marketing, finance,
human resources, etc. (www.investopedia.com). ERP has been used extensively in inventory
management with a varied of techniques applied innovatively ranging from Vendor managed
inventory system, Vendor managed inventory system and Distribution Resources planning. An
equally important system is a warehouse management system (WMS) which does not contain
customer data or prices as ERP rather; a functioning inventory management system needs the
continuous exchange between WMS and ERP.

Vendor managed inventory system

Vendor managed inventory system enables the following:

1. Information sharing
2. Stock replenishment
3. Timely Replenishment

Inventory replacement decisions are centralized with upstream manufacturers or distributors in

this JIT technique. It enables manufacturers or distributors to eliminate the need for customer to
reorder, reduce or exclude inventory and stock outs. Under such an agreement, the vendors
obtain warehouse or point-of-sale information from the retailer and use that information to make
inventory-restocking decisions. This point of sale could be facilitated by the use of Electronic

20
Data Interchange (EDI) systems at the supermarket at the EPOS (Bailey et al, 2005). In a VMI
partnership, the supplier, usually the manufacturer but sometimes a reseller or distributor, makes
the main inventory replenishment decisions for the consuming organization. The purchase order
acknowledgement from the vendor may be the first indication that a transaction is taking place:
an advance shipping notice informs the buyer of materials in transit. The arrangement transfers
the burden of asset management from the consuming organization to the vendor, who may be
obliged to meet a specific customer service goal (usually some kind of stock target). The newest
trend in the area of inventory control and management are Vendor managed inventory system
(VMI) systems and agreements. In a VMI system distributors and/or manufacturers agree to take
over the inventory management for their customers. Based on daily reports sent automatically
from the customer to the distributor, the distributor replenishes the customers stocks as needed.
The distributor or manufacturer sees what is selling and makes all necessary arrangements to
send the customer new products or parts automatically. No phone calls or paperwork are
necessary allowing the supply chain process to remain uninterrupted. The benefits that can
accrue to both parties in a VMI arrangement are noteworthy. Both parties should experience a
savings of time and labor. The customer is able to maintain fewer items in stock and can rely
upon a steady flow of products or parts. The vendor or distributor benefits in two ways. First, a
supplier is able to better anticipate production requirements. Second, the supplier benefits from a
strong relationship with the customer, one that is more difficult to alter than would be a vendor-
customer relationship in which such automated systems did not exist. The tracking of inventory
can be possible by use of Radio Frequency Identification (RFID) which enhances the efficiency
of inventory management and replenishment practices. Substantial benefits in the form of
reduced interruptions in production or lost sales due to items being out of stock will accrue to the
supermarket. RFID enables bulk reading where many tags can be read in a short space of time –a
typical read rate is hundreds of tags per second, the tags can be read over a very long range –
many hundreds of metres in the case of specialized tags. RFID tags are durable because they can
be ripped, soiled and performance is not impaired. They can do bulk reading in a short space of
time. All these benefits enhance effectiveness of inventory management processes and hence the
overall the supply chain (Gerald & David, 2000). RFID and sensor data is real-time, high volume
and operational in nature. RFID technology is designed to inform and enrich systems and
processes, not be an end in itself as with all outsourcing arrangements, there are potential

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negatives to a VMI system. The first is the partial loss of control experienced by the customer in
managing his or her own inventories. Second is the problem this type of system poses on a
vendor in the case of volatile sales periods. It is very difficult for a distributor or manufacturer to
hold large inventories for one customer on a VMI system who is experiencing a slowdown in
sales while having to ramp up for another customer who is experiencing rising demand. Both
parties to a VMI agreement must weigh the pros and cons of such a system thoroughly and be
sure to include in any VMI agreement prearranged methods for dealing with periods of volatile
sales patterns.

Vendor managed inventory system is a collaborative strategy between a customer and a

supplier to optimize the availability of products at a minimal cost to the two firms. The supplier
takes the responsibility for the operational management of the inventory within a mutually
agreed framework of performance targets which are constantly monitored and updated to create
an environment of continuous improvement.

VMI is where the manufacturer is given the responsibility for monitoring and controlling
inventory levels at the retailer’s distribution center and in some instances, at the retail store as
well. Specific inventory targets are agreed and it is the responsibility of the manufacturer to
ensure that suitable inventory is always available. Ordinarily, the store controls its own stocks,
and orders more from a wholesaler when it wants them (Cocker, Jessop & Morrison, 2012).
Vendor managed, contracting, or stockless buying is more sophisticated and merging of the
ordering and inventory function than blanket. With Vendor managed inventory system, the
supplier controls the stocks, and sends more along when they are needed. The benefits of such
arrangements are that the supplier can co-ordinate stocks over a wider area, use optimal
inventory policies, organize transport more efficiently, increase integration in the supply chain,
collect more information about demand patterns, and give a consistent customer service. Such
arrangements depend on accurate and timely, and suitable computerized systems have become
available in recent years. The main advantage for retailers lies in the reduction of operating costs
and also the delay in payment for the products in question. For, manufacturers, it is suggested
that running a VMI system for a retailer provides the opportunity to develop a much closer, and
hopefully more binding relationship with the retailer as well as giving a much better visibility of
real demand. This can make the planning of production much easier and can lead to significant

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reductions in inventory holding right through the supply chain (Rushton, Croucher, & Baker
(2013). Further, according to Flynn and Johnson (2015) with VMI systems, the supplier is
responsible for maintaining the buying organization’s inventory levels. The supplier has access
to inventory and generates purchase orders. Typically, the supplier manages the buyer’s
inventory at the buyer’s location. The supplier pulls stock, packs, ships and invoices. This
procedure reduces cycle time by reducing the number of people /functions touching the process.
These systems are tools do managing small orders. VMI may also be used for consignment
inventory wherein payment is made after inventory is used. According to Rushton, Croucher and
Baker (2013) where VMI is used, the vendor takes responsibility for the inventory held in the
client’s premises. The vendor monitors inventory levels and organizes replenishment. Ownership
of the inventory passes to the client when inventory is utilized. For VMI to be effective, the
management of information is crucial. According to Rushton et al., (2013), the main advantage
of VMI is that the level of overall inventory in the client’s warehouse can be reduced. The
vendor is able to schedule deliveries efficiently, as it has better visibility of the client’s
requirements and it can incorporate these requirements at an early stage into its production
schedules. For the process to work, there need to be high levels of trust between the two partners.
This often derived from the cultural compatibility of the companies involved. Where the client
retains an element of involvement in managing the vendor’s inventory, this is referred to as co-
managed inventory. The decision to place a certain volume of business with a supplier should
always be placed on a sound set of criteria. When purchasing decisions are largely viewed as
operational rather than strategic, the analysis of the supplier’s ability to meet quality, quantity,
delivery, price/cost and service objectives are governed the supplier selection decision. Some of
the most important supplier attributes related to these prime criteria may include past history,
facilities and technical strength, financial status, organizational and management, reputation,
systems, procedural compliance, communications, labor relations and location

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Enterprise Resource Planning

Enterprise resource planning in inventory management helps in the following ways as discussed
below

1. Demand forecasting Management

2. Inventory Turnover Management
3. Safety stock measure Management
4. Expiry Management

Effective inventory management plays a pivotal role in ensuring the delivery of quality products.
The supermarkets sector is characterized by its dynamic and complex nature, with varying
demands for products supplies and stringent requirements for accuracy and efficiency. Enterprise
Resource Planning (ERP) systems have emerged as comprehensive solutions to address these
challenges by integrating various business processes for effective inventory management
including forecasting, procuring, negotiating with supplier. Notably, the study conducted by Li
and Zhang (2019) provides a foundational understanding of the impact of ERP systems on
inventory management in the supermarkets sector, emphasizing the transformative potential of
ERP adoption. To the best of our knowledge, no research has been conducted so far which would
analyze the impact of integrating ERP in Inventory Management in a healthcare institution in
Pakistan.

In a study designed by Chrwang-Jyh Ho (2006), to examine the cost reduction in an ERP-

integrated Inventory Management system. Using quantitative, Analysis of Variance, or ANOVA,
the system was analyzed for cost reduction by the lot-sizing ordering practices, wherein, the ERP
system was simulated to raise purchase orders, instead of small sizes, in sizes of complete lots.
The findings also reveal that lead time uncertainty negatively impacts the performance of ERP-

24
based supply chain systems. Hence, we can assume that ERP implementation will positively
enhance the inventory turnover rate by predicting the demand and putting safety stock measures
in place and limiting near-expiry residues in the total inventory.

The key finding emphasizing the negative impact of manual inventory control on production
floor efficiency, causing delays and customer dissatisfaction are reported by Wei et al. (2017) in
their case-study on a multinational manufacturing company of Malaysia. The company was
found to be having problems in maintaining inventory via manual paperwork for Material
Requirement Planning, or MRP, extending the services to procurement of raw materials etc. The
research, combining both quantitative and qualitative methods, highlights the challenges of poor
inventory management due to manual control. The ERP system was supported by an additional
software module which would cater all the MRP requirements digitally by maintaining automatic
inventory, procurement and further dispatching to production floor. The study shows that by
combining Supply-Chain with Inventory Management using ERP software reduces errors and
operational costs and introduces streamline functionality for a large-scale manufacturing plant
(H2). This is also highlighting the fact that large-sized operations, in today’s era with quick
scenarios of supply and-demand that influence not only the market-standing of the company but
also influence the profit generation, cannot rely on slow and outdated paperwork and manual
labor for smooth workflow (as put in our Hypothesis H3 & H4). Hence, a requirement of
automated intelligent systems that can execute commands within seconds is self-explanatory.

A Chinese study of a company conducted by Yi et al. (2015) which was a middle-sized

manufacturer of Polysilicon sheets also emphasizes the integration of automated software
systems for inventory management practices. The company could not keep a streamline process
for all its workflow as each batch of polysilicon sheet order had a different method of
manufacturing. The total manufacturing process was divided into three workshops, each with its
own warehouses for receiving, storage and dispatching of goods to the next level of operation. At
each point during the operational workflow, starting from the receiving of raw material to the
final dispatch of the finished product, the company used manual labor and data entry into MS
Excel spreadsheets for its inventory management. While it was quite laborious and costly, the
magnitude of errors were also huge as multiple products, finished and semi-finished, were being
stored and dispatched from these warehouses at the same time. So, an ERP system was enforced

25
that employed a state-of-the art Barcoding system to differentiate and distinguish the origin and
specifications of each of the product at each of the operational stage with accuracy and precision
without requiring multiple paperwork.

This standardization of the operational practices also cut down on the times required for clearing
and carrying out each step in the manufacturing, as now each step is performed automatically by
the ERP system within seconds or minutes, rather than exhaustive and error prone manual labor.

Pirmanta et al. (2021) explored the effect of ERP on the sustainability of the operational
workflow in the manufacturing capacities on Indonesian industries during the COVID-19
pandemic. They argued that the pandemic had a varying effect of the industrial sector as many
products fell out of manufacturing as their demands in the market dwindled, whereas many
products became short in the market as their demands outgrew the supply, which, in turn, were
affected in general by the embargos and restrictions posed globally to handle the spread of the
deadly virus. The authors used Structural Equation Modeling technique to analyze the data that
they had obtained from 285 participants using social media as a platform to gather data. The
Structural Equation Modeling brings together and correlates a number of variables for a given
observational system and identifies how they are linked with each other and how, by changing
one variable, it affects the other variables and, ultimately the end result of the process. The study
showed that using ERP systems during COVID-19 pandemic in Indonesia positively affected the
internal and external integration of Supply Chain management. Internal integration refers to
sharing of knowledge and hard-facts within the organization, while externally, it may mean
linking up with suppliers and end-users so that a proper sales forecast can be generated. Using
ERP in such integration not only optimizes the internal working, in this case manufacturing of
the products, of an organization but it also helps reduce the cost (of consumption as well as
wastage) and marginalize profits by using intelligent predictive measurements regarding the
quantitative need of the raw materials as per the demand and the keeping an open line of supply
to the vendors and end-users. Demand forecast will cut down on unnecessary labor and cost,
delivery time and mutual data sharing will enhance coordination and end-user trust on the
company, reducing the existence of near-expiry items.

Another study by Sebayang et al. (2021), which also incorporated 78 participants from the
Indonesian manufacturing industries, but not during COVID-19 pandemic, reported positive

26
findings of using ERP software on company performance and overall inventory management
efficiency by improving the internal integration of Supply Chain department. They argued, using
the Structural Equation Modeling analysis, that by providing access to all relevant and concerned
departments of an institution, ERP provides an insight to the current inventory for necessary
steps of manufacturing and thus streamlines the demand and supply of the product and reduces
time taken for originating a decision.

Lansink (2020) discussed the role of integrating ERP software into a company management
system to effectively potentiate the inventory profiling. In his study, he presents the case of a
Dutch company that produces pallet wrappers. In their case the company suffered from recurrent
halts and errors in the system due to incorrect mapping and identification numbering of the items
using verbal commands and experience rather than a systematic approach. This had been costing
the company valuable time in taking decisions and management chaos with false or mistaken
information relayed at certain steps of the operational workflow. The company was evaluated for
its exercises on inventory management and a recommendation was made to use an ERP system
designed for intelligent solutions of business management. By using such a system, the company
was theorized to cut down on its resource wastage and enhance the operational capacities and
efficiency. This is also in support of our Hypotheses H1, H2 and H4. Li et al. (2021) highlighted
a subset of ERP software solution that focuses on the logistical functions within an organization.
Termed as Logistical Information Management System, or LIMS, such a software can be taken
as a highly specialized and focused software system similar to ERP but only for the logistics of
the product. They argue that while ERP manages effectively almost the entirety of a business
operation at various steps, ranging from procurement of raw materials for production to listing of
inventories for planning the production and bringing together internal and external stakeholders
for proper decisions, the operations of company logistics also play an indispensable role as the
transportation at each step described above could influence the outcome of a process positively
as well as negatively. For such operations, a separate LIMS solution can be incorporated
efficiently with the ERP system to further enhance and determine the step-by-step systematic
operational step in manufacturing process. However, the integration of LIMS does not directly
affect the productivity of the organization, it can surely smoothen up the already existing
processes with optimum expiry management.

27
A study by Jamil and Qayyum (2015) is notable as it evaluated the challenges and success
factors of ERP Implementation in Pakistani setting. They covered 60 industries from the textile,
auto industry, packaging, production and banking sectors as well as ERP consultants and used
Liker scale surveys as a research tool. They identified that the critical factors for success of ERP
Implementation in Pakistani setting include teamwork management and facilitation, effective
communication and minding gaps for positive integration of the ERP software throughout the
organization and proper project management to avoid post-implementation failure.

Warehouse management System

A warehouse management system (WMS) is a key part of the supply chain and primarily aims to
control the movement and storage of materials within a warehouse and process the associated
transactions, including shipping, receiving, put away and picking.

Warehouse management systems often utilize automatic identification and data capture
technology, such as barcode scanners, mobile computers, wireless LANs and potentially radio-
frequency identification (RFID) to efficiently monitor the flow of products.

Warehouse management system is an information technology database used to support storage

operations and increase warehouse productivity by coordinating integrated storage activities and
keeping accurate inventory (Istiqomah et al., 2020). WMS acts as a system that organizes all
warehousing activities in the supply chain, such as receiving stock, storing stock, and managing
stock orders.

The software helps to keep the check on the inventory, raw material, and shipment details and
customers feedback (Ali et al., 2020). The use of Warehouse management system is becoming
more frequent in this modern era. As warehouses and DCs become more automated and less
reliant on human labor, and as that labor becomes harder to come by and more expensive,
software that supports these operations is in high demand (McCrea, 2019). Based on a survey
conducted by McCrea (2022), more than half (56%) of the companies surveyed use WMS,
inventory management, etc. software; 30% use supply chain management and planning (SCP)
software; and 26% currently use Transportation Management System (TMS). The urgency of
using WMS in this modern age is driven by the need for businesses to improve their operational
efficiency, reduce costs, and meet increasing customer expectations. In the present day,

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Warehouse Management Systems (WMS) are extensively employed across various industries to
optimize warehouse operations and enhance supply chain efficiency. The use of WMS has
evolved to address modern business challenges and capitalize on technological advancements.
The influence of WMS extends to the complex landscape of multi-channel retail, enabling
businesses to effectively oversee inventory and orders across diverse sales platforms. WMS is
pivotal in managing product returns proficiently, facilitating the reverse logistics process with
clarity and efficacy. Integration with automation technologies enhances operational workflows,
while data analytics tools embedded within modern WMS offer valuable insights for refining
warehouse performance. Ensuring compliance, traceability, and real-time tracking of shipments,
WMS caters to industries with rigorous regulatory requirements. Integration with other enterprise
systems and a positive impact on customer experience further underline the contemporary
significance of WMS. Their scalability and adaptability make WMS suitable for businesses of all
scales and industries. As technological progress continues, the role of WMS is poised to evolve
further, adapting to the evolving demands of a globally interconnected business environment.

Distribution Requirement Planning

Distribution requirements planning (DRP) is scheduling technique the controls inventory control
and applies MRP principles to distribution inventories. It can also be considered as a method of
handling replenishment of the stock in an organization. DRP is useful for both manufacturing
organizations, such as car manufactures that sell their car via several distribution points, such as
regional and local distributors, and purely merchandising organizations, such as supermarkets
(William, 2009).

Distribution requirements Planning (DRP) is a process of determining the type, the quantity and
time when goods are required at a given location. The use of DRP ensure that stock is available
when required.

DRP allows for decision making for positioning and quantity of inventory in a distribution
system. The study concludes that DRP implementation cost affect supply chain performance.
The study also concludes that reduced profits affect supply chain performance, lower labor
turnover and improved sales values affect supply chain performance, identifying corrective

29
actions to address issues affect supply chain performance. The study concludes that employee
training is necessary in implementation of DRP, training offered by hired experts at Chieni assist
in implementation of DRP, training program about implementation of DRP at Chieni
supermarket is coordinated in time, training reduce cost of sourcing appropriate goods and
services and that; training significantly improves the implementation of DRP.

Most of the employees were aware of staff training. The study concludes that top level
management support contributes to policies on the implementation of DRP and integration issues
to a great extent, an implication that DRP adoption and implementation is ultimately the
responsibility of top management. the study also concludes that; top management are committed
to staff development and DRP adoption, top management make efforts to standardize the supply
chain processes in the organization, top management are willing to take accountability for DRP
management and delivery time lines, top management make efforts to establish quality assurance
management systems and that; the implementation of the practices includes the constructs of
management commitment contribute to improve the quality of service to the customers.

Conceptual Framework

Information communication technology tools inventory management practices

Vendor managed inventory system Information sharing

Stock replenishment

Timely Replenishment

Demand forecasting Management

Inventory Turnover Management

Expiry Management

Enterprise Resource Planning

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Warehouse management System

Distribution Resource Planning

Gaps to be filled

Summary

The existing literature provides a solid foundation on the importance and benefits of ICT tools in
inventory management. However, significant gaps remain, particularly concerning the context-
specific challenges and opportunities in regions like Nyeri County. Addressing these gaps
through empirical research and context-specific studies can provide valuable insights

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 CHAPTER THREE

Introduction

This chapter presented the research methodologies that were used to carry out the study, which
involved the selection of the research design, data collection, and how data was analyzed.

Research Design

The study used a descriptive research design. Orodho (2003) indicates that a descriptive survey
is used to establish the relationship between the variables. In this study, descriptive survey was
used to explain the relationship between use of information technology systems in inventory
management and performance of supermarkets in Kenya.

Descriptive research was a preferred approach for investigating contemporary phenomena within
their real-life context, especially when there was ambiguity in the boundaries between the

32
phenomenon and its context. It was pertinent to achieve the study's objective, as the findings
were expected to offer insight and a comprehensive understanding of the application of
Information communication Technology in supermarkets in Nyeri County. Descriptive research
offered an overview of Information communication Technology tools in supermarkets s in Nyeri
County, while the analytical research interpreted the gathered data to draw meaningful
conclusions regarding the link Information communication Technology tools and inventory
management while the analytical research interpreted the gathered data to draw meaningful
conclusions regarding the link between information communication technology tools and
inventory management.

Target Population

According to Mugenda and Mugenda (2012), the population targeted was a predetermined group
of people or things from whom study findings could be extrapolated.

The population of that study included employees of Chieni Supermarket. The target population
comprised ……………employees drawn from different departments.

Target population

Departments Management Staff Staff Staff

staff supervisory operational total

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 TOTAL

Sample and sampling techniques.

For this study, stratified random sampling was employed. This technique is appropriate because
it ensures that every sub-group (stratum) within the target population is adequately represented,
which improves the accuracy and generalizability of the study findings (Kothari, 2004).
In the context of Chieni Supermarket, the population is divided into distinct departments, each of
which forms a stratum. By using stratified random sampling, employees from each department
(management, supervisory, and operational) will be proportionally selected to participate in the
study, ensuring that each category of staff is represented.
To determine the appropriate sample size, the study used Yamane's (1967) formula for
calculating sample sizes from a finite population, which is suitable for obtaining a rave sample:
n=N/(1+N(e2))

Where:
 n is the sample size,
 N is the population size,
 e is the margin of error (for this study, a margin of error of 5% will be used, which is
common in social science research).

Data collection procedures/Instruments to be used

Data was collected through primary data. Primary data was acquired using structured
questionnaires administered to managers, production supervisors, and employees involved in
inventory management within the Chieni Supermarket.

The questionnaire encompassed aspects such as current ICT tools in inventory management,
benefits, encountered challenges, technology utilization, and perception.

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Data analysis methods
Once the data had been collected, it underwent quantitative analysis using statistical methods.
The data was coded and entered into Excel for analysis. Descriptive statistics such as frequencies
and percentages were used to summarize the data. Results were presented in the form of tables
and charts to facilitate easy interpretation and understanding..

Ethical considerations
It's important to consider ethical guidelines when conducting research. This includes obtaining
informed consent from participants, maintaining confidentiality and privacy, ensuring justice in
participant selection, respecting participants' autonomy, being transparent and honest in reporting
findings, obtaining ethical review approval, being culturally sensitive, and ensuring data
integrity. These considerations help to uphold the ethical standards of the research process and
protect the rights and well-being of the participants.

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